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Why would I pay someone to find me a property?

Wed, 11 Jan 2023 06:49:43 GMT

A Buyer's agent - Who needs one

Anyone can buy a property - Right?

Yes, they can. However, there are also valid reasons why you might want to enlist the help of someone else. In this article we'll look at the common reasons for using a Buyer's Agent. Okay, but what about costs? Does it cost me to use a buyer’s agent? They short answer is yes it costs, the longer but the end cost can actually save you money and you could and often are better off if you buy with a buyer’s agent. We discuss costs at the end of the article.

As stated above, there are many reasons why you may want to employ the services of a buyer’s agent, we'll take a look at six common ones:

Local Knowledge;
Buying from interstate or overseas;
Time saving needs;
Negotiation skills;
Finding the right property and finally
Anonymity.

We will discuss each one highlighting how a buyer's agent can assist in that particular need.

Local Knowledge

When we think of local knowledge we typically think of it in terms of directions and landmarks, finding our way around an area and not getting lost, but really that is only half the story. When purchasing a property, land or even a business premise, there are more things that need to be thought about. For example: any current planning applications that might have an impact (road changes, new buildings, change of zoning etc.). If you are purchasing to be near a particular school you need to know if that property falls in to the desired schools catchment area. There have been instances whereby a couple purchased a house in the street to be in the catchment area only to find that they were on the wrong side of the street and there house wasn't in the school catchment area.

Using a Buyer's agent will help you avoid these issues and if you use a reputable buyer’s agent, one that is qualified in real estate and a member of the an industry association like the Real Estate Institute of Queensland (REIQ) they will also have access to the same tools and software as sales real estate agents. This means that they can carry out searches on properties, see their sales or rental histories as well as information about the property that may not have been disclosed. A buyer’s agent will work in your best interest (whereas a Real Estate sale agent is contracted to work in the vendors best interest). Having the detailed knowledge about a property is key when negotiating. The vendors real estate agent is a trained negotiator, it makes sense to have one on your side. You could end saving not only the cost of your buyer’s agent fees, you could end up saving more

Buying from interstate or overseas

When you are looking to buy interstate or even intercontinental quite apart from knowing all the local rules, all the areas to avoid and what is a good deal and what should be avoided how do you go about finding and viewing the property? Take a week off and madly drive around and try to find something that is acceptable? There an easier way. Using a buyer’s agent. Let them source a number of potential properties for you. They can do virtual (video) ours with you or save them and send them to you. Once you found the one , or the selection you want to visit in person they can arrange for them to be viewed in a timeframe that works with you, or in a fast moving market they can be your point person. Being able to tour the property via a video call is a great way to help identify whether or not it’s for you. Your buyer’s agent will do all the normal things you might do on an inspection: check the electrical items all work correctly, check the taps and drains don’t leak, aren’t blocked. Look for signs of movement or obvious pet or pest damage.

Rules and purchase process differ state to state as well as country to country. For example in Queensland, The real estate agents are responsible for the sales contracts and an offer to settlement can be concluded in as little as 30 days, where as in New South Wales contracts are typically handled by solicitors and the purchase process normally takes months not weeks. In England, Solicitors also handle the contracts, but there contracts are not exchanged quite often for 2-4 months, up until this point the house is still on the market, even once the contracts are exchanged settlement can take months to complete. Using a buyer’s agent will give you access to the specifics of the rules in the area in which you are looking to purchase.

Time saving

When you are looking to buy a property whether it’s a home, and investment or a new business premise, it take an amount of time. You might spend a couple of hours on property portals trying to find something, and when you do, it may already be under contract or sold. If you find multiple properties you think might be suitable and then go an visit them that could take a hour each if they are really close, or a day , or even a week if you are travelling a reasonable distance. The point is, it can take a up lot of time. Time is the one commodity that many people do not have an excess of and seems to be the more money you have, the less time you have…

Imagine, just sending an email or making a call was all it took to find your next property… Well that’s the job of a buyer’s agent. They do all the time consuming work, gathering all the information, doing the research, providing you with a clear summary of the properties that match your criteria with a simple plus’s and minus’s summary for you. Rather than jump in you car, helicopter or plane to visit them, your buyer’s agent can take you on video tour, you don’t even need to leave your desk. You can relax in the knowledge that the buyer’s agent has your interests as their priority and will point out all the important issues, not the just the ones the sales agent wants you to see

Negotiation skills

When you sell your property, you engage the services of a sales agent. They typically have the best chance of find you the best buyer, but more importantly, they train in the art of negotiation. Many of you will be excellent negotiators too, that goes without needing to be said, however, The real estate sales agent will have all the facts about the property and be able to bring these in to justify their price position and maybe as important, they are able to keep emotion out of it. Buying on the other hand is often full of emotion and rarely does the buyer have all the relevant details that could be used in a price negotiation.

Many buyers will use the contents of a building a pest report to try and reduce an agreed price of a purchase (a Building pest report, by necessity is full of legal disclaimers that can make a property sound much worst than it is) if you are relying on this tactic to get a lower a price it might not work. A buyer’s agent, is basically a real estate agent that only works for the buyer, they have same access to the property information as the sellers agent. The buyer’s agent will also have detailed information other similar properties in the area which may have a bearing on the value / purchase price of the property. They are also a highly skilled negotiator and working for you. Quite often a buyer’s agent will be able to negotiate a price lower than the buyer was willing to pay, in fact many buyer’s agents will work hard to get a reduced price for their client that also covers the cost of their fees.

Finding the right property

Simple right? Well, no, not always. You know the basics, what’s on your must haves and your wish lists. What about all the subjective stuff? Many buyers talk about the ‘feel’: “This house just felt right, the moment I walked in the door”. How do you search for the ‘feel’ factor?

Another subjective often mentioned by buyers is ‘The look’. Two identically specified houses on similar streets and one has it the other not. When asked what it is, the buyer says “Well, this one just ‘looked’ right for us”. Again, how do you define or search for that? Buyers that place a high value on ‘Look’ and ’Feel’ can often end up in an endless loop of viewing properties and ruling them out because of one or the other and often become jaded or left in a feeling of ‘its too hard!’.

How can a buyer’s agent help in this circumstance? There is no simple magical answer, but there is experience. After spending time with you, your agent will have clear idea of your ‘must haves’ and your ‘wish list’ wants, but more importantly they will have more of an understanding of you and what subjective must haves and wants are important to you. They will overlay this with the features and requirements of the property you’re looking for and locate properties that more closely match what it is you want. Again, really useful for buyers searching out of their current area, of for buyers that are time poor.

Anonymity

Why might anyone want to remain anonymous ? Aside from the celebrities there are many people who wish to remain unknown to the seller. It’s quite common in business when purchasing a competitor or when buying complementary businesses when the buyer is likely to get charged a premium based on who they are. This does cross over in to the residential markets too.

One is example is when you are buying an investment property in your street, many owners do not what their neighbours to know. High profile business owners or local community individuals too often do not want publicity or knowledge of their home / investments to be made public and they will buy in the name of a shell-company. Keeping your identity secret would be very hard if you had to attend inspections and auctions in person, that’s where a buyer’s agent comes in. They can attend inspections for you and show you around via Video link, they can also represent you are auctions and act on your behalf, subject to the correct paperwork.

In summary, a Buyers agent can save you money, they ensure you have all the information you need about a prospective purchase, they can save you valuable time, find the property you’re looking for negotiate the best price for you.

What is a buyers Agent and who wants one?

Fri, 06 Jan 2023 05:10:33 GMT

Written by and published bythe HomeLoan Experts

The Following article was published by the HomeLoan Experts on 22 Sept 2022.

We are not afiliated with them, nor do we take credit for their articcle. The HomeLoan Experts can be contacted on 0448281222

How does a buyers agency work?

A buyers agency might be just what you need if you’re trying to buy a property within a short period of time and want to avoid stress.

The property industry knowledge and negotiation skills they have can give investors, and buyers in general, an edge in a competitive real estate market.

Investors or a high income earners can get a lot of value out of a buyers agency but are they for everyone?

In basic terms, a buyers agency employs agents that work on behalf of buyers to buy a property.

Buyers agents or advocates can provide you a shortlist of properties to choose from based on their knowledge of the local market, how much you’re willing to spend and your capital growth expectations.

What steps do they take?

After they get an understanding of where you’re looking to buy, the type of property you’re after and how much you’re willing to spend, a buyers agent will typically present you with a brief of the location based on market data.

This data may come from research houses like CoreLogic and Australian Property Monitors and show the average price of the property type you want to buy and what the capital growth potential is for the location.

The beauty of a buyers agency is that once you’re firmly set on location and the type of property, the buyers agency will likely already have some properties on a short list for you.

Right away, you’ve already saved time and the possibility of missing out on the property of your dreams!

Depending on the size of the buyers agency, you will be placed with a buyers agent that specialises in a certain location or postcode.

If you’re buying multiple properties, you may even get a team but just be aware that this may cost you more upfront.

These agents will already have relationships with vendors and real estate agents that they’ve dealt with in the past.

Although it sounds like a conflict of interest, these real estate agents and their clients are often after a quick sale or in a location considered to be a buyers market.

Sellers are often quick to take advantage of unskilled buyers but a buyers agency will already have an idea of what the market value of the property is.

As the agent shortlists properties, go with them to the open houses and get an understanding of how they reach their market value figures. You may learn something.

Pretty quickly, the agent can tell whether the vendor is asking way too much for the property based things like location, the condition of the property and the size of the land and building.

Keep in mind that the bank’s valuation is totally different to the market value of a property.

Who uses a buyers agency?

High-end investors

Professional property investors or those wanting to buy multiple properties at once often use the services of a buyers agency.

That’s because they already have a significant portfolio to manage and they just don’t have the geographical reach to handle all of the transactions.

Luxury or high-end property buyers

These people are typically looking for a luxury home for themselves and their family.

They tend to be high income earners and work long and strange hours that prevent them from getting out there and finding a property themselves.

Because buyers agents have access to unlisted sales from private vendors, big spenders can often snap up a home that the general public doesn’t even know about.

Interstate buyers

People looking to take advantage of an interstate property play sometimes don’t have the ability to travel to check out the property.

A buyers agency located in the area can source the property for you, negotiate with the seller and come back to you with a price without you having to leave your home.

Overseas investors

Many overseas investors prefer to purchase properties in another country, sight unseen.

Commercial property investors

Some buyers agencies have their own commercial specialists that can help mum and dad commercial investors buy their first shop, pub or cafe.

They understand how to analyse the financials of the business you want to buy and negotiate on price.

In that way, you can make an informed decision on whether to go ahead with the transaction.

Check out the commercial property loan page to discover how we can help you get finance for a number of different commercial property types.

Call us on 0448281222 or complete our online enquiry form if you’re looking to buy an investment property.

Who doesn’t use a buyers agency?

First home buyers or low deposit holders borrowing up to 90 – 95% of the property value don’t tend to employ the services of a buyers agency because it’s an extra cost that they just don’t have on hand.

It may also be a risky expense when you’re just starting to make home loan repayments to be having to pay such a large expense.

Also, consider whether these funds are coming out of your deposit or not.

Can you be confident that the agent can get enough of the purchase price to warrant the buyers agency fee?

How do they make the settlement process easier?

Since you should already be pre-approved for a home loan, a buyers agency can help you avoid having your conditional approval lapse before finding a home.

To explain, pre-approvals generally expire after 3 to 6 months.

If you find a property after your pre-approval expires, you will have to re-apply for a home loan and your pre-approval could potentially wait another 4-5 days for the bank to get back to you.

Even with a bank that offer next day approval, you could already be missing out on your dream home.

In fact, a buyers agent can typically source a property and have the sale finalised 7 weeks sooner than if you were to go about it yourself.

This is specifically for families or couples looking to buy their dream home.

For investment properties though, it could take you as little as 2 to 3 weeks from the buyers agency sourcing a property to you signing the contract of sale.

Throughout the process, the buyers agent will be in touch with your mortgage broker and solicitor to let them know what stage of the buying process you’re at.

This will help to ensure a smooth transition of the vendor receiving the deposit and the signing of contracts.

Ultimately, you can reach settlement faster and get into your home a lot sooner.

What are the benefits?

Find a property a lot faster

Choosing the property that’s right for you takes a lot of time, something most people just don’t have because of work and family commitments.

Even if you’re able to put in some time to look at properties, you’re never going to have enough time as a buyers agency.

You’ll also be wasting your efforts on attending open houses for a property that doesn’t quite fit your criteria.

This means that you’re more likely to make a half-hearted decision on a property and location that you really should know more about.

This includes considering past sales results and market factors that would impact future values.

Yes, there are resources and tools online, but outsourcing this to someone else may be worth the cost if you can potentially save more on the purchase price than with own efforts.

A buyers agency can literally call you up and let you know that you should be moving quickly on a property before it’s snapped up or the price goes up rapidly.

The great saying of a “time in” market doesn’t really apply when you’re trying to land yourself a great piece of real estate: timing is everything.

They look at your needs and goals objectively

Whether you’re buying an owner occupied property or an investment property, sometimes what you want isn’t necessarily what you need.

Although it’s recommended that you seek financial advice as well, a buyers agency can help you work out your short term and long term goals.

They do this by asking crucial questions that you probably haven’t considered.

They will also give you a good picture of the location you’re looking at and what you can expect in terms of return on investment (ROI).

Access to unlisted properties

A buyers agency has access to private sales as well as the properties that are available for sale to public.

These properties aren’t listed because the vendors have good relationships with the buyers agency.

They’d rather deal with an agent for a quick sale than go through the process of spending money and time on a real estate listing.

You’re beating others to the sale

By coming in with a hard bargain that’s backed-up with good market knowledge, a buyers agent can quickly make a deal with a vendor rather than you having to go back and forth with them over days or even weeks.

The worst thing you can do is waste a vendor’s time, which is difficult if you’re working full time or have other commitments.

A buyers agent can stop other potential buyers from beating you to a great buy.

Interstate reach

Are you living in Brisbane and want to buy a property in Fitzroy?

With a buyers agency, you can leverage their knowledge and skills to buy a property interstate: you don’t even have to be there!

Investment knowledge

Unlike simply buying an owner occupied property based on your desires, a buyers agency can help you source properties that are right from a capital growth perspective.

It could be that property is a unit instead of a house or in a neighbouring suburb rather than the location you decided on.

That’s because they have a good knowledge of capital growth opportunities across a number of different locations.

Negotiation and auction skills

A buyers agency knows when to go in hard in negotiations and when a light touch is needed.

Everyday people just don’t have these skills especially when they’re buying from a seasoned property investor.

Vendors who are selling their investment property will always drive a hard bargain but a professional knows how to build a strong case for what they believe is a fairer price for the property.

They’re also emotionally-detached and will represent you objectively in an environment where emotions can run high.

What are the negatives?

Is it really worth it?

Sure, you’re saving time and effort but bear in mind that in a seller’s market, vendors and real estate agents are unlikely to move much on price if they have ten other potential buyers lined up.

This is particularly true in “hot” locations where there are more buyers than houses for sale.

A buyers agency is generally only for people who have some knowledge of the potential market value of similar properties in the location.

Otherwise, you could potentially be paying a fee for little savings on the purchase price.

You have to really be questioning what the buyers agency is proposing to do in terms of the sale or when sourcing a property in the first place.

Remember: they’re acting your behalf and helping you through the process but you ultimately have to run the show.

Some buyers advocates can be unethical

Beware of a buyers agency that charges an engagement fee for a consultation or an excessive full service rate.

Some buyers agents don’t charge an engagement fee at all!

Also, ask them for their experience and testimonials, whether they’re licenced real estate agents and whether they’re a member of an association like the Real Estate Buyers Agents Association of Australia (REBAA) .

Some buyers agents earn commission from vendors or developers, which isn’t illegal in itself but should put question marks over their objectiveness.

You have to move pretty quickly

If you haven’t used a buyers agency before, you should be aware that their agents are trained to move quickly on transactions.

This is generally the point of using an advocate but it can make some buyers feel rushed into a sale.

In saying that, it’s something you’d have to deal in the “real world” or without the help of a buyers agency.

Never rush yourself into a purchase and seek out independent financial advice if need be.

Be wary of groups that spread themselves too thin

You may come across a group that claims to be experts in every major capital city in Australia, for instance.

The reality is that most buyers agencies are one or two man shows meaning they really have no area of specific expertise at all.

They often make these claims to get as many deals as possible.

Find out how many agents they have and whether they have an agent that specialises in your location.

How to choose a buyers agency

With so many buyers agents operating in Australia, choosing the right one can be tough.

Ensuring they’re a member of REBAA is a good start.

The REBAA is the peak body in Australia for buyers agents and they work to maintain professional standards in the buyers agency industry.

According to the Real Estate Institute of NSW, all buyers’ agents must hold a real estate agent’s licence.

However, they can request this to be limited so that they can only carry out buying functions.

Ask the buyers advocate if they’re licenced to sell as well: this may tell you that they’re not operating in your best interests.

Buyers agency FAQs

Deciding to use a buyers agency is a big decision when buying an investment property or even trying to find the property of your dreams.

Here are some more facts about buyers agencies that you probably didn’t know.

How does a buyers agency get paid?

For standard owner occupied or investment properties, most buyers agents charge a flat rate for their service.

The industry standard is typically 1.5 to 3 per cent of the purchase price.

So for a home being sold for $800,000 in Melbourne, you could be paying around $12,000 to $24,000.

That may sound like a lot upfront but if they can save you upwards of $100,000 on the purchase price, then it may be worth it.

Let’s say you had an $80,000 deposit saved for the property: your Loan to Value Ratio (LVR) would have been 90%, not including the cost of completing the purchase such as conveyancing fees, stamp duty and other legal costs.

By potentially saving $88,000 off the purchase price (minus the buyers agency fee), your LVR would be under 90% LVR meaning you could be eligible for interest rate discounts and waived Lenders Mortgage Insurance (LMI) depending on your profession or if you earn more than $150,000 per annum.

A good buyers agency also receives no commissions from real estate agents or vendors.

On top of that, some charge an engagement fee just for a consultation while others don’t.

It’s always important to ask for their fee structure and whether you can get a discount because you were referred by a friend or a financial professional like your mortgage broker.

What if I cannot afford the buyer’s agent fee right now?

There are a few buyers’ agents which allow a 12 month payment plan to pay the buyer’s agent fee.

You will need to pay a flat sign-on fee of about $1,500 (inclusive of GST). This initial sign-on fee includes the cost of:

The agent’s time and expertise
One strata/building report
One pest and building report
A contract review before you sign the contract
Success fee (which varies according to the final property purchase price)

Once the buyer’s agent has successfully located, assessed and negotiated an ideal property, you will start making 12 equal and monthly payments upon the unconditional exchange of contract.

As you don’t have to pay the buyer’s agent fee upfront and pay it in instalments, you get to move into your property faster.

Should I get financial advice?

It may be worth getting financial advice from an independent like an account or a financial adviser as to whether you can afford a buyers agent.

The last thing you want to do is to put yourself in financial hardship.

Can they bid at auction for you?

Auctions can be stressful no matter whether you’re a first time buy or a seasoned investor.

If you don’t have an idea of the market value for a particular property, you could easily be paying way more for a property that you should have.

It’s even tougher if you live overseas or you live interstate: you just don’t have the knowledge of the area to set yourself a reasonable bidding limit.

A buyers agency can do all of this for you and usually at a lower fee than a full service offering if you just need an agent for an auction.

Can a buyers agency help me buy multiple properties?

Finding a buyers agency with a large team of professionals is crucial if you want to rapidly grow your portfolio with real estate from several different locations.

Some buyers agencies even provide coaching and can act as your “investment partner”, along with a good mortgage broker, for the long term.

When investing, it always helps to build strong relationships.

Is using a buyers advocate tax deductible?

In some cases, you may be able to claim the cost of a buyers agency as a tax deduction if you’re buying an investment property.

It’s essential you speak to your accountant about tax-related matters though.